DENVER, CO — (Marketwire) — 07/21/11 — Guaranty Bancorp (NASDAQ: GBNK)
Guaranty Bancorp (NASDAQ: GBNK) today reported second quarter 2011 net
income of $1.4 million before preferred stock dividends compared to a net
loss of $4.4 million before preferred stock dividends in the second quarter
2010. After giving effect to the preferred stock dividends, the loss per
basic and diluted common share in the second quarter 2011 was approximately
zero compared to a loss per basic and diluted common share of $0.11 for the
same period in 2010. On a pre-tax basis, the improvement in net income was
$8.4 million for the second quarter 2011 as compared to 2010.
Paul W. Taylor, Guaranty Bancorp-s President and Chief Executive Officer,
stated, “I am proud to announce our best quarter in the past three very
difficult years. In addition to quarterly net income of $1.4 million, we
improved all of our asset quality measures, further increased our already
strong risk-based capital ratios, continued to grow the number of new
deposit customers and generated new loan business in the communities we
serve. We have very high expectations for the future performance of this
organization. Although we are not yet where we want to be with respect to
performance, thanks to the hard work by many dedicated employees, we
continue to make significant progress toward our goals.”
Mr. Taylor continued, “Although our total loans declined during the quarter
due to planned reductions in problem loans, this has been our highest
quarter of new loan bookings in several years. Specifically, we booked
$71.4 million of new loans with over 40 different businesses during the
quarter as well as extending $22.8 million of credit on existing loans.
Included in these totals are $9.1 million of SBA loans for which we are a
preferred lender. Further, our pipeline of potential new loans continues to
grow. Finally, as announced yesterday, I am excited to have Michael Hobbs
join us on July 27, 2011, as President of our wholly-owned subsidiary,
Guaranty Bank and Trust Company. Mr. Hobbs will be a great addition to our
team.”
For the six-months ended June 30, 2011, net income was $1.9 million before
preferred stock dividends compared to a net loss of $6.2 million before
preferred stock dividends for the same period in 2010. After giving
effect to the preferred stock dividends, the loss per basic and diluted
common share for the first six months of 2011 was approximately $0.02 per
share compared to a loss per basic and diluted common share of $0.17 for
the same period in 2010. The improvement in net income is due mostly to a
$9.4 million reduction in provision for loan losses and a $6.4 million
reduction in noninterest expense primarily related to other real estate
owned. These significant income improvements were partially offset by a
$3.3 million decrease in net interest income for the year-to-date period in
2011 as compared to 2010 due mostly to lower earning assets in 2011 as well
as a $0.5 million decrease in noninterest income due primarily to a net
decrease in gains on the sale of assets.
Second quarter 2011 net interest income of $14.7 million remained level
compared to the first quarter 2011, and decreased by $1.4 million from the
second quarter 2010. The Company-s net interest margin of 3.56% for the
second quarter 2011 reflected an increase of 14 basis points from the first
quarter 2011 and an increase of 9 basis points from the second quarter
2010.
Although net interest income remained relatively flat for the second
quarter 2011 compared to the first quarter 2011, interest income decreased
$0.7 million, offset by a $0.7 million decline in interest expense. The
$0.7 million decrease in interest income in the second quarter 2011 as
compared to the first quarter 2011 is primarily attributable to a $0.5
million decrease in interest income on loans as a result of a $72.4 million
reduction in average balances quarter over quarter. The remaining decrease
in interest income is a result of a reduction in our average security
holdings during the quarter. Offsetting the decrease in interest income
was a $0.7 million decline in interest expense. Specifically, time deposit
interest expense decreased by $0.7 million due to a $104.3 million decrease
in average time deposits, mostly higher cost, brokered time deposits. The
Company anticipates further reductions in time deposit interest through the
remainder of 2011 as a result of scheduled maturities of brokered deposits
of $69.3 million with a weighted average cost of 3.43%, including $40.1
million in the early third quarter 2011.
Net interest income decreased by $1.4 million in the second quarter 2011,
as compared to the same quarter in 2010, due primarily to an unfavorable
$2.0 million volume variance, partially offset by a $0.6 million favorable
rate variance. The unfavorable volume variance for the second quarter 2011
as compared to the same quarter in 2010 is due mostly to the $302.0 million
decrease in average loan balances, offset by a $98.6 million increase in
the average balance of all other earning assets, particularly taxable
investments, and a $305.0 million decrease in average time deposits. The
favorable rate variance for the second quarter 2011 as compared to the same
quarter in 2010 is primarily due to a 52 basis point decrease in the cost
of deposits partially offset by a 24 basis point decrease in the yield on
earning assets. Overall net interest margin improved by nine basis points
to 3.56% in the second quarter 2011 as compared to 3.47% in the same
quarter in 2010.
Net interest income for the first six months of 2011 decreased by $3.3
million from $32.8 million for the six months ended June 2010 to $29.5
million for the six months ended June 2011. The $3.3 million decline
consists of a $3.5 million unfavorable volume variance, partially offset by
a $0.2 million favorable rate variance. The unfavorable volume variance
for the first six months of 2011 as compared to the same period in 2010 is
due mostly to a $302.7 million decline in average loan balances partially
offset by a $107.9 million increase in the average balance of all other
earning assets and a $283.2 million decrease in time deposits. The $0.2
million favorable rate variance for the first six months of 2011 as
compared to the same period in 2010 is due to the one basis point increase
in net interest margin.
The $0.9 million decrease in noninterest income in the second quarter 2011
as compared to the first quarter 2011 reflects a $1.0 million swing in
gain/loss on sale of securities from the $0.7 million gain recognized in
the first quarter to the $0.3 million loss recognized in the second
quarter. The sale of securities was done primarily to reduce duration
within the investment portfolio. During the quarter, the average life of
our bond portfolio was reduced by approximately seven months. Excluding
the $1.2 million gain on sale of loans recognized in the second quarter
2010, noninterest income remained relatively flat in the second quarter
2011 compared to the same quarter in 2010.
Excluding the $1.2 million gain on sale of loans recognized in June 2010,
noninterest income for the six months ended June 30, 2011 increased by $0.7
million compared to the same period in 2010. This increase is the result
of a $0.4 million increase in net gains on sale of securities.
Additionally, customer service and other fees increased by $0.2 million
year over year, primarily as a result of higher overdraft and interchange
fee income.
The $0.8 million decrease in noninterest expense in the second quarter 2011
as compared to the first quarter 2011 is due mostly to a $0.3 million
decrease in expenses related to other real estate owned, a decrease of $0.3
million in salaries and employee benefit expenses and a $0.3 million
reduction in insurance and assessment expense. The decrease in salaries
and employee benefit expenses is due to a $0.2 million decrease in payroll
taxes and a decrease in average full-time employees during the quarter.
The decrease in other real estate owned expense is primarily due to a
reduction in net write-downs on other real estate owned properties
resulting from valuation adjustments and sales. The decrease in insurance
and assessment expense is a result of the change in the FDIC insurance
assessment rules as of April 1, 2011 due to the implementation of new rules
mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
We expect to continue to realize the benefits of reduced insurance
assessment throughout the remainder of 2011.
Noninterest expense for the six months ended June 30, 2011 decreased by
$6.4 million compared to the same period in 2010 primarily due to a $4.6
million decrease in expenses associated with other real estate owned, a
$1.4 million decrease in insurance and assessment expenses and a $0.5
million decrease in amortization of intangible assets. The decrease in
other real estate owned expense for the year-to-date period in 2011 as
compared to the same period in 2010 is mostly due to a reduction in net
write-downs on other real estate owned properties resulting from valuation
adjustments and sales. The decrease in insurance and assessment expense for
the first six months of 2011 as compared to the same period in 2010 is due
primarily to a favorable change in our risk classification in the third
quarter 2010 as well as the change in the FDIC insurance assessment rules
on April 1, 2011 as discussed above.
Preferred Stock Dividend
Effective May 15, 2011, a non-cash preferred stock dividend was paid in the
form of additional shares of Series A convertible preferred stock to
holders of Series A convertible preferred stock in the amount of $1.5
million.
At June 30, 2011, the Company had total assets of $1.7 billion, which
represented a $123.0 million decline as compared to December 31, 2010 and a
$236.7 million decline as compared to June 30, 2010. The decline in assets
from December 31, 2010 is primarily due to a $113.4 million decrease in
loans, net of unearned discount. The loan decline was due mostly to a $91.7
million decrease in commercial loans and a $19.7 million decrease in real
estate loans.
In the second quarter 2011, our classified loans declined by $25.5 million
with another decrease of $17.2 million in loans internally classified as
special mention or watch. In addition to this $42.7 million decline in
classified and watch rated loans, other real estate owned decreased by $5.3
million in the second quarter 2011. These declines were the result of the
successful execution of our strategic plan to reduce problem assets by our
special assets group.
Pass-rated loans consist of all loans not otherwise adversely classified or
included on our internal watch list. As described above, loans that are
adversely classified or on our internal watch list decreased by $42.7
million in the second quarter. While total loans declined by $35.0 million
in the second quarter 2011, our pass-rated loans increased by $7.7 million
during the second quarter. In addition, our pipeline of new loan
opportunities continues to grow each month.
Since June 30, 2010, the ratio of construction, land and land development
loans to capital has fallen by 28 percentage points to 73% at June 30,
2011. Similarly, the ratio of commercial real estate loans to capital has
fallen by 56 percentage points to 259% at June 30, 2011. These ratios are
below the regulatory commercial real estate concentration guidelines of
100% for land and construction loans and 300% for all investor real estate
loans, respectively.
Noninterest-bearing deposits as a percentage of total deposits increased to
31.2% at June 30, 2011, as compared to 25.6% at December 31, 2010 and 21.9%
at June 30, 2010.
Non-maturity deposits at June 30, 2011 increased by $44.4 million as
compared to December 31, 2010 and increased by $124.5 million as compared
to June 30, 2010. The increase in non-maturity deposits is primarily
attributable to the continued success of our strategic deposit gathering
campaign. In addition to the $44.4 million increase in balances of
non-maturity deposits in 2011, the total number of customer accounts
increased by over 1% during the same period.
Time deposits continue to decrease primarily as a result of management-s
efforts to reduce the overall level of higher cost time deposits,
particularly brokered and internet deposits. Total brokered deposits at
June 30, 2011 were $80.2 million as compared to $179.9 million at December
31, 2010 and $255.5 million at June 30, 2010. Brokered deposits represent
5.9% of total deposits at June 30, 2011 as compared to 12.2% at December
31, 2010 and 16.3% at June 30, 2010. In addition to this $175.3 million
decline in brokered deposits over the past twelve months, we also
experienced a $70.3 million decline in internet time deposits over the same
time period. The remaining decline in time deposits is primarily related to
the non-renewal of other higher cost certificates of deposits. Management
monitors time deposit maturities and renewals on a daily basis and will
raise rates on local time deposits if necessary to grow such deposits.
Borrowings were $163.2 million at June 30, 2011 as compared to $163.2
million at December 31, 2010 and $164.3 million at June 30, 2010. The
entire balance of borrowings at each balance sheet date consists of term
advances with the Federal Home Loan Bank.
Regulatory Capital Ratios
All of the regulatory capital ratios are above the highest regulatory
capital threshold of “well-capitalized” at June 30, 2011. The Company-s
and the subsidiary bank-s actual capital ratios for June 30, 2011 and
December 31, 2010 are presented in the table below:
Generally, the allowance for loan losses is included in total capital for
regulatory purposes; however, it is limited to 1.25% of total risk-weighted
assets. At June 30, 2011, approximately $22.4 million of the subsidiary
bank-s allowance for loan losses was disallowed from being included in
total risk-based capital under the regulatory capital rules, or
approximately 1.71% of the subsidiary bank-s risk-weighted assets. In
addition, approximately $1.3 million of deferred tax assets were disallowed
for purposes of computing Consolidated Tier 1 capital.
During the second quarter 2011, all categories of classified and watch list
loans declined by an aggregate of $42.7 million. In particular, during the
second quarter 2011 nonaccrual loans decreased by $20.5 million, other
classified loans decreased by $5.0 million and loans classified as special
mention or watch decreased by $17.2 million. Nonaccrual loans decreased
due to the $9.0 million of
charge-offs, with the remainder due mostly to loan payoffs, net of new
additions.
Net charge-offs in the second quarter 2011 were $9.0 million as compared to
$2.2 million in the first quarter 2011 and $13.5 million in the second
quarter 2010. Approximately $7.9 million of the charge-offs in the second
quarter were related to three loans, with an outstanding balance of $22.2
million prior to the charge-offs. Most of the charge-offs in the second
quarter were specifically allocated for as of March 31, 2011.
In addition to the $4.2 million of allowance specifically allocated to
impaired loans, the Company has partially charged-off $15.8 million related
to impaired loans on the balance sheet as of June 30, 2011. These partial
charge-offs reduced the specific component of our allowance for loan
losses. The general component of the allowance for loan losses remained
relatively flat at $34.7 million at June 30, 2011 and March 31, 2011. The
general component represented 3.18% of loans, net of unearned discount, at
June 30, 2011 as compared to 3.09% of loans, net of unearned discount, at
the end of the previous quarter. The consistency in the overall level of
the general component of the allowance for loan losses during the second
quarter primarily reflects the fact charge-offs as a percentage of gross
loans did not change significantly from the overall charge-off percentage
over the past two years.
The Company recorded a provision for loan losses in the second quarter 2011
of $1.0 million, as compared to $2.0 million in the first quarter 2011 and
$8.4 million in the second quarter 2010. The decrease in the provision for
loan losses quarter over quarter reflects the continued shrinkage of our
loan portfolio combined with the fact that the majority of charge-offs
taken in the second quarter were specifically reserved for as of March 31,
2011. Further, additions to specific reserves requiring additional
provision were minimal during the second quarter.
Shares Outstanding
As of June 30, 2011, the Company had 53,232,485 shares of common stock
outstanding, including 1,518,625 shares of unvested stock awards, but
excluding 156,567 shares of common stock to be issued under its deferred
compensation plan. In addition, the Company had 69,013 shares of Series A
convertible preferred stock outstanding, with a liquidation value of $1,000
per share.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to tangible
assets, including tangible book value, tangible book value after giving
effect to conversion of preferred stock, and tangible equity ratio, all of
which exclude intangible assets.
The Company discloses these non-GAAP financial measures to provide
meaningful supplemental information regarding the Company-s operational
performance and to enhance investors- overall understanding of the
Company-s core financial performance. Management believes that these
non-GAAP financial measures allow for additional transparency and are used
by some investors, analysts and other users of the Company-s financial
information as performance measures. These non-GAAP financial measures are
presented for supplemental informational purposes only and should not be
considered a substitute for financial information presented in accordance
with GAAP. These non-GAAP financial measures presented by the Company may
be different from non-GAAP financial measures used by other companies.
About Guaranty Bancorp
Guaranty Bancorp is a bank holding company that operates 34 branches in
Colorado through a single bank, Guaranty Bank and Trust Company. The bank
provides banking and other financial services including real estate,
construction, commercial and industrial, energy, consumer and agricultural
loans throughout its targeted Colorado markets to consumers and small to
medium-sized businesses, including the owners and employees of those
businesses. The bank also provides trust services, including personal trust
administration, estate settlement, investment management accounts and
self-directed IRAs. More information about Guaranty Bancorp can be found at
.
Forward-Looking Statements
This press release contains forward-looking statements, which are included
in accordance with the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. In some cases, you can identify
forward-looking statements by terminology such as “may,” “will,” “should,”
“could,” “expects,” “plans,” “intends,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential,” or “continue,” or the negative of
such terms and other comparable terminology. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the Company-s actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: failure to maintain adequate
levels of capital and liquidity to support Company-s operations; the effect
of the regulatory written agreement the Company and its bank subsidiary
have entered into and potential future supervisory action against the
Company or its bank subsidiary; general economic and business conditions in
those areas in which the Company operates; demographic changes;
competition; fluctuations in interest rates; continued ability to attract
and employ qualified personnel; ability to receive regulatory approval for
our bank subsidiary to declare dividends to the Company; adequacy of our
allowance for loan losses, changes in credit quality and the effect of
credit quality on our provision for credit losses and allowance for loan
losses; changes in governmental legislation or regulation, including, but
not limited to, any increase in FDIC insurance premiums; changes in
accounting policies and practices; changes in the deferred tax asset
valuation allowance; changes in business strategy or development plans;
changes in the securities markets; changes in consumer spending, borrowing
and savings habits; the availability of capital from private or government
sources; competition for loans and deposits and failure to attract or
retain loans and deposits; changes in the financial performance and/or
condition of our borrowers and the ability of our borrowers to perform
under the terms of their loans and other terms of credit agreements;
political instability, acts of war or terrorism and natural disasters; and
additional “Risk Factors” referenced in the Company-s most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission, as
supplemented from time to time. When relying on forward-looking statements
to make decisions with respect to the Company, investors and others are
cautioned to consider these and other risks and uncertainties. The Company
can give no assurance that any goal or plan or expectation set forth in
forward-looking statements can be achieved and readers are cautioned not to
place undue reliance on such statements, which speak only as of the date
made. The forward-looking statements are made as of the date of this press
release, and the Company does not intend, and assumes no obligation, to
update the forward-looking statements or to update the reasons why actual
results could differ from those projected in the forward-looking
statements.
Contact Information
For more information, please contact:
Paul W. Taylor
President, Chief Executive, Financial and Operating Officer and Secretary
Guaranty Bancorp
1331 Seventeenth Street, Suite 345
Denver, CO 80202
303/293-5563